BILL NUMBER: AB 2869	CHAPTERED  09/30/00

	CHAPTER   977
	FILED WITH SECRETARY OF STATE   SEPTEMBER 30, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 29, 2000
	PASSED THE ASSEMBLY   AUGUST 31, 2000
	PASSED THE SENATE   AUGUST 30, 2000
	AMENDED IN SENATE   AUGUST 25, 2000
	AMENDED IN SENATE   JUNE 15, 2000
	AMENDED IN ASSEMBLY   MAY 25, 2000

INTRODUCED BY   Assembly Member Machado

                        MARCH 6, 2000

   An act to amend Section 1748.10 of, and to amend, repeal, and add
Section 1748.12 of, the Civil Code, relating to credit card issuers.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2869, Machado.   Credit cards:  marketing information.
   Existing law requires a credit card issuer to provide written
notice to all persons who are holders of the issuer's credit cards if
the issuer discloses marketing information, as defined, concerning a
consumer which discloses the consumer's identity to any person,
except specified 3rd parties.  The notice is required to describe the
cardholder's right to prohibit this disclosure.  Existing law
specifies the methods of satisfying this requirement.
   This bill would revise the requirements for the written notice to
provide that it must include both a preprinted form and reference a
toll-free telephone number which a card holder may use to exercise
the right to prohibit disclosure.
   This bill would also, operative April 1, 2002, recast this
provision to, among other things, require that a credit card issuer
provide the notice before the issuer discloses the information and,
if the information is disclosed, at least once per year, as
specified.  The bill would also revise the definition of marketing
information, as specified, and exempt communications to a corporate
subsidiary or affiliate of the card issuer that are not used for
marketing purposes from the disclosure prohibition, except as
specified.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 1748.10 of the Civil Code is amended to read:
   1748.10.  This act shall be known and may be cited as the"Areias
Credit Card Full Disclosure Act Of 1986."
  SEC. 2.  Section 1748.12 of the Civil Code is amended to read:
   1748.12.  (a) For purposes of this section:
   (1) "Cardholder" means any consumer to whom a credit card is
issued, provided that in cases when more than one credit card has
been issued for the same account, all persons holding those credit
cards may be treated as a single cardholder.
   (2) "Credit card" means any card, plate, coupon book, or other
single credit device existing for the purpose of being used from time
to time upon presentation to obtain money, property, labor, or
services on credit.  "Credit card" does not mean any of the
following:
   (A) Any single credit device used to obtain telephone property,
labor, or services in any transaction under public utility tariffs.
   (B) Any device that may be used to obtain credit pursuant to an
electronic fund transfer but only if the credit is obtained under an
agreement between a consumer and a financial institution to extend
credit when the consumer's asset account is overdrawn or to maintain
a specified minimum balance in the consumer's asset account.
   (C) Any key or card key used at an automated dispensing outlet to
obtain or purchase petroleum products, as defined in subdivision (c)
of Section 13401 of the Business and Professions Code, which will be
used primarily for business rather than personal or family purposes.

   (3) "Marketing information" means the categorization of
cardholders compiled by a credit card issuer, based on a cardholder's
shopping patterns, spending history, or behavioral characteristics
derived from account activity which is provided to a marketer of
goods for consideration.  "Marketing information" does not include
aggregate data which does not identify a cardholder based on the
cardholder's shopping patterns, spending history, or behavioral
characteristics derived from account activity or any communications
to any person in connection with any transfer, processing, billing,
collection, chargeback, fraud prevention, credit card recovery, or
acquisition of or for credit card accounts.
   (b) If the credit card issuer discloses marketing information
concerning a cardholder to any person, the credit card issuer shall
provide a written notice to the cardholder that clearly and
conspicuously describes the cardholder's right to prohibit the
disclosure to marketers of goods of marketing information concerning
the cardholder which discloses the cardholder's identity.  The notice
shall include a preprinted form by which the cardholder may exercise
this right and shall advise the cardholder of a toll-free telephone
number which the cardholder may call to exercise this right.
   (c) The requirements of subdivision (b) may be satisfied by
furnishing the notice to the cardholder (1) on or with the credit
application, (2) with the credit card when it is delivered to the
cardholder, or (3) in any manner and at any time, provided that it is
furnished prior to the disclosure of marketing information relating
to the cardholder.  No notice need be furnished to a cardholder to
whom prior notice has been given, as to whom no marketing information
will be disclosed, or to whom notice has been given prior to the
effective date of this act which complies with the provisions of
subdivision (b).
   (d) An election to prohibit disclosure of marketing information,
as provided in subdivision (b), shall terminate upon receipt by the
credit card issuer of notice from the cardholder that the cardholder'
s election under subdivision (b) is no longer effective.
   (e) The requirements of subdivisions (b) and (c) do not apply to
any of the following communications of marketing information by a
credit card issuer:
   (1) Communications to any party to, or merchant specified in, the
credit card agreement, or to any person whose name appears on the
credit card or on whose behalf the credit card is issued.
   (2) Communications to consumer credit reporting agencies, as
defined in subdivision (d) of Section 1785.3.
   (3) Communications to a corporate subsidiary or affiliate of the
card issuer.
   (4) Communications to a third party when the third party is
responsible for conveying information from the card issuer to any of
its cardholders.
   (f) If the laws of the United States require disclosure to
cardholders regarding the use of personal information, compliance
with the federal requirements shall be deemed to be compliance with
this section.
   (g) This section shall become operative on July 1, 1994.
   (h) This section shall become inoperative on April 1, 2002, and as
of January 1, 2003, is repealed unless a later enacted statute, that
is enacted before January 1, 2003, deletes or extends that date.
  SEC. 3.  Section 1748.12 is added to the Civil Code, to read:
   1748.12.  (a) For purposes of this section:
   (1) "Cardholder" means any consumer to whom a credit card is
issued, provided that, when more than one credit card has been issued
for the same account, all persons holding those credit cards may be
treated as a single cardholder.
   (2) "Credit card" means any card, plate, coupon book, or other
single credit device existing for the purpose of being used from time
to time upon presentation to obtain money, property, labor, or
services on credit. "Credit card" does not mean any of the following:

   (A) Any single credit device used to obtain telephone property,
labor, or services in any transaction under public utility tariffs.
   (B) Any device that may be used to obtain credit pursuant to an
electronic fund transfer but only if the credit is obtained under an
agreement between a consumer and a financial institution to extend
credit when the consumer's asset account is overdrawn or to maintain
a specified minimum balance in the consumer's asset account.
   (C) Any key or card key used at an automated dispensing outlet to
obtain or purchase petroleum products, as defined in subdivision (c)
of Section 13401 of the Business and Professions Code, which will be
used primarily for business rather than personal or family purposes.

   (3) "Marketing information" means the categorization of
cardholders compiled by a credit card issuer, based on a cardholder's
shopping patterns, spending history, or behavioral characteristics
derived from account activity which is provided to a marketer of
goods or services or a subsidiary or affiliate organization of the
company that collects the information for consideration. "Marketing
information" does not include aggregate data that does not identify a
cardholder based on the cardholder's shopping patterns, spending
history, or behavioral characteristics derived from account activity
or any communications to any person in connection with any transfer,
processing, billing, collection, chargeback, fraud prevention, credit
card recovery, or acquisition of or for credit card accounts.
   (b) If the credit card issuer discloses marketing information
concerning a cardholder to any person, the credit card issuer shall
provide a written notice to the cardholder that clearly and
conspicuously describes the cardholder's right to prohibit the
disclosure of marketing information concerning the cardholder which
discloses the cardholder's identity.  The notice shall be in 10-point
type and shall advise the cardholder of his or her ability to
respond either by completing a preprinted form or a toll-free
telephone number that the cardholder may call to exercise this right.

   (c) The requirements of subdivision (b) shall be satisfied by
furnishing the notice to the cardholder:
   (1) At least 60 days prior to the initial disclosure of marketing
information concerning the cardholder by the credit card issuer.
   (2) For all new credit cards issued on or after April 1, 2002, on
the form containing the new credit card when the credit card is
delivered to the cardholder.
   (3) At least once per calendar year, to every cardholder entitled
to receive an annual statement of billings rights pursuant to 12
C.F.R. 226.9 (Regulation Z).  The notice required by this paragraph
may be included on or with any periodic statement or with the
delivery of the renewal card.
   (d) (1) The cardholder's election to prohibit disclosure of
marketing information shall be effective only with respect to
marketing information that is disclosed to any party beginning 30
days after the credit card issuer has received, at the designated
address on the form containing the new credit card or on the
preprinted form, or by telephone, the cardholder's election to
prohibit disclosure.  This does not apply to the disclosure of
marketing information prior to the cardholder's notification to the
credit card issuer of the cardholder's election.
   (2) An election to prohibit disclosure of marketing information
shall terminate upon receipt by the credit card issuer of notice from
the cardholder that the cardholder's election to prohibit disclosure
is no longer effective.
   (e) The requirements of this section do not apply to any of the
following communications of marketing information by a credit card
issuer:
   (1) Communications to any party to, or merchant specified in, the
credit card agreement, or to any person whose name appears on the
credit card or on whose behalf the credit card is issued.
   (2) Communications to consumer credit reporting agencies, as
defined in subdivision (d) of Section 1785.3.
   (3) To the extent that the Fair Credit Reporting Act preempts the
requirements of this section as to communication by a credit card
issuer to a corporate subsidiary or affiliate, the credit card issuer
may communicate information about a cardholder to a corporate
subsidiary or affiliate to the extent and in the manner permitted
under that act.
   (4) Communications to a third party when the third party is
responsible for conveying information from the card issuer to any of
its cardholders.
   (f) If the laws of the United States require disclosure to
cardholders regarding the use of personal information, compliance
with the federal requirements shall be deemed to be compliance with
this section.
   (g) This section shall become operative on April 1, 2002.
